Advance Licence

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This query is : Resolved

Mahammad Mujawar (Querist)

15 September 2010 Dear All,

We are a manufacturer-exporter. Also we are importing our raw material.We are thinking to import raw material against advance licence. Hence we want compleat information rearding advance licence i.e.application process and documents, redemption process and documents required for it and closing of advance licence. Please confirm what will be the actual export obligation against advance licence.
Also please inform any specific type of bill of entry for imports and specific type of shipping bill for export is required for advance licence.If required then explain what type?

Looking for the detailed information of advance licence.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

16 September 2010
ATTN: - MR. MAHAMMAD MUJAWAR,

Advance Authorisation
An Advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in the export product. The underlying principal is to make available all kinds of inputs to an exporter free from duties and taxes.
Such authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty, if any
Advance Authorisation can be issued for:
1. Physical Exports;
2. Intermediate Supplies;
3. Deemed Exports;
A manufacturer – exporter can apply.
A merchant exporter can also apply on the basis of a tie up arrangement with a supporting manufacturer.
What forms the basis of applying for an Advance Authorisation?
a. Govt. of India has announced SION for around 7200+ items against which an Advance Authorisation can be procured.
b. However there exists a provision for getting an Advance Authorisation on self declared norms which subsequently goes for ratification with the office of DGFT, New Delhi.
What are the conditions governing an Advance Authorisation?
a. Advance Authorisation and / or materials imported there under shall not be transferable even after completion of export obligation, i.e. Actual User condition applies.
b. Advance Authorisation shall be issued with a positive value addition while undertaking an Export Obligation against the duty free imports.
What is the necessity for a Bank Guarantee?
a. Whenever an exporter undertakes the imports before exports, he shall have to provide to the customs authority a bank guarantee to the tune of the duty that would be saved on such imports.
b. However the exporter is allowed to release the goods on LUT (Legal Undertaking) in lieu of a BG in specified cases.
Is it necessary to always import the goods first?
a. The exporter is allowed to procure the goods locally from an indigenous supplier against the advance authorisation.
b. In cases where exports are conducted prior to imports, no Bank guarantee shall be required.
What is the validity of the authorisation?
a. Validity of the authorisation is 24 months from date of issue for both and export and import with a provision of extension for both on paying appropriate fees.
Which exports are considered in fulfillment of E.O.?
a. The export made has to be a DEEC shipment in the Customs records to be qualified as an export against the advance authorisation.
b. The E.O. is treated to be fulfilled when proper accounting is being placed before the regional authority who when satisfied will issue a discharge letter.
For more info: log on to:

(1) https://www.ieport.com/cus2002/Circulars/cir24.htm
(2) https://dgftcom.nic.in/exim/2000/policy/chap-04.htm
(3) Dgft.gov.in
(4) Infodrive .in
(5) https://pib.nic.in/archieve/eximpol/eximpol00-01/Chap-07.htm

REGARDS,

RAMESH VERMA

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